A gradual slowdown is expected in the construction of houses over the next three years due to rising interest rates, as well as land and labour shortages.
However, the pipeline of work yet to be completed is likely to keep home building activity ticking along comfortably until mid-2023.
"The fastest increase in the cash rate in almost 30 years will bring Australia's home building boom to an end, but there is a significant buffer of building work to be completed," Housing Industry Association chief economist Tim Reardon said.
Work on around 132,000 houses is expected to start in 2021/22, according to the industry body's outlook report, which is around 6.7 per cent below last year's record figures.
The HIA expects the detached house building slowdown to continue next year, with 121,320 new starts expected in 2022/23 and 99,330 in 2024/25.
Work on new apartments and other multi-unit homes was 35.1 per cent below the 2015/16 peak in 2021/22, but HIA expects it to increase over a three year period.
Multi-unit starts are expected to increase by 4.4 per cent to 80,270 in 2022/23, with a further 2.5 per cent increase in 2023/24.
Mr Reardon said despite uncertainty around the cash rate, demand for units, in particular, would remain strong due to low unemployment, booming export markets, a severe rental shortage and the return of migrants and overseas students.
There are also signs building material prices are starting to ease, according to Mr Reardon, with the high cost of timber and other materials largely to blame for the soaring cost of construction in the past few years.
ANZ economists Felicity Emmett and Adelaide Timbrell also expected the backlog to support construction throughout the rest of this year.
"But we expect a cumulative fall of around 16 per cent through 2023 and 2024, as higher mortgage rates and lower house prices flow through to weaker approvals and then falling construction work," the economists said.
They noted that housing was an important driver of GDP in Australia, so a decline in activity would act as a drag on the economy.
